State Bank of India recommends shorting ban 20 August 2013Sooranam Reporter: Georgina Lavers
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The State Bank of India’s chairman, Pratip Chaudhuri, has allegedly said that the bank has recommended to the finance minister in India that short selling should be banned.
Chaudhuri reportedly made the comments whilst opening a 15,000th branch of the bank in Sooranam in Southern India.
It was only in July that India’s insurance regulator allowed insurers to lend a maximum of 10 percent of their securities, in rules hoped to revive the country's market.
The Insurance Regulatory and Development Authority (IRDA) has been seeking comment as of August last year relating to insurers participating in a securities lending and borrowing scheme.
Comments were received over the course of a year from the various stakeholders including life insurers, general insurers and other entities, along with suggestions for the controls needed.
“After examination of the comments received, it is observed that insurers can generate extra yield on the securities held in their custody by lending securities through [the] SLB mechanism,” said an IRDA statement.
Amongst the rules was the notice that around Rs 50,000 crores of stocks may now be eligible to be lent to short sellers.
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